Vicarious liability on the move

Lord Reed opened his judgment in Cox (Respondent) v Ministry of Justice (Appellant)[1] ("Cox") by quoting the now well-known statement of Lord Phillips in Various Claimants v Catholic Child Welfare Society[2] ("Christian Brothers"): "The law of vicarious liability is on the move." As Lord Reed himself said in Cox, the law "has not yet come to a stop", and still it does not as on 1^st April 2020 the Supreme Court handed down two more judgments which addressed the law on vicarious liability.[3]

WM Morrison Supermarkets plc v Various Claimants ('the Morrisons case')

The Morrisons case concerns the circumstances in which an employer is vicariously liable for wrongs committed by its employees, and also whether vicarious liability may arise for breaches by an employee of duties imposed by the Data Protection Act 1998 ("DPA"). The Court held that Morrisons was not responsible for the criminal acts of its employee in the circumstances of the case.

Background

The case concerned actions for breach of statutory duty under the DPA, misuse of private information, and breach of confidence by employees of Morrisons after a disgruntled employee, Skelton, had deliberately leaked the personal data of tens of thousands of his colleagues on a file sharing internet site and to newspapers. The claimants alleged that Morrisons was vicariously liable for Skelton's illegal acts.

At trial, the judge concluded that Morrisons bore no primary responsibility for Skelton's acts but was vicariously liable on each basis claimed. The judge also held that Skelton had acted in the course of his employment, relying on Lord Toulson's judgment in Mohamud v WM Morrison Supermarkets plc[4]. Morrisons' subsequent appeal to the Court of Appeal was dismissed.

Reasoning

The Supreme Court (Lord Reed delivering the judgment) allowed Morrison's further appeal:

• The general principle in vicarious liability cases was still that it arises out of a relationship of employment: the wrongful conduct must be so closely connected with acts the employee was authorised to do that, for the purposes of the liability of the employer to third parties, it may fairly and properly be regarded as done by the employee while acting in the ordinary course of his employment. [22-23]
• That general principle has to be applied with regard to the circumstances of the case before the court and the assistance provided by previous court decisions. The words "fairly and properly" are not, therefore, intended as an invitation to judges to decide cases according to their personal sense of justice. [24]
• Lord Toulson's words in Mohamud that "motive is irrelevant" should not be taken out of context: whether the employee was acting on his employer's business or for personal reasons was important, but, on the facts of Mohamud, the reason why he had committed the tort could not make a material difference to the outcome. This was all the comment that "motive is irrelevant" was intended to convey. [29-30]
• It followed that the judge and the Court of Appeal misunderstood the principles governing vicarious liability in a number of relevant respects. (i) First, the disclosure of the data on the internet did not form part of Skelton's functions or field of activities: it was not an act which he was authorised to do. (ii) Secondly, the fact that the five factors listed by Lord Phillips in Various Claimants v Catholic Child Welfare Society[5] were all present was nothing to the point. Those factors were not concerned with the question whether the wrongdoing in question was so connected with the employment that vicarious liability ought to be imposed, but with the distinct question whether, in the case of wrongdoing committed by someone who was not an employee, the relationship between the wrongdoer and the defendant was sufficiently akin to employment as to be one to which the doctrine of vicarious liability should apply. (iii) Thirdly, although there was a close temporal link and an unbroken chain of causation linking the provision of the data to Skelton for the purpose of transmitting it to KPMG and his disclosing it on the internet, a temporal or causal connection does not in itself satisfy the close connection test. (iv) Fourthly, the reason why Skelton acted wrongfully was not irrelevant: on the contrary, whether he was acting on his employer's business or for purely personal reasons was highly material. [31]
• Applying the general test laid down by Lord Nicholls in para 23 of Dubai Aluminium Co Ltd v Salaam[6], the question was whether Skelton's disclosure of the data was so closely connected with acts he was authorised to do that, for the purposes of the liability of his employer to third parties, his wrongful disclosure may fairly and properly be regarded as done by him while acting in the ordinary course of his employment. [32]
• There was no vicarious liability in the present case: Skelton's wrongful disclosure of the data was not so closely connected with his task of collating and transmitting payroll information to an auditor, that it could fairly and properly be regarded as acting in the ordinary course of his employment. On long-established principles, the fact that his employment gave him the opportunity to commit the wrongful act was not sufficient to warrant the imposition of vicarious liability. An employer is not normally vicariously liable where the employee was not engaged in furthering his employer's business, but rather was pursuing a personal vendetta. [32-47]

In the Barclays Bank case the Supreme Court was asked to decide whether Barclays Bank should be held vicariously liable for sexual assaults, allegedly committed between 1968 and about 1984, by the late Dr Gordon Bates. The Supreme Court unanimously allowed Barclays' appeal, and held that it is not vicariously liable for Dr Bates' alleged wrongdoing. Lady Hale delivered the Court's judgment.

Background

Dr Bates was a self-employed medical practitioner. Applicants for jobs with Barclays would be offered a job, subject to passing a medical examination and obtaining satisfactory results in their GCE examinations. Medical appointments were conducted for Barclays by Dr Bates who provided him with a pro forma report to be filled headed "Barclays Confidential Medical Report". Dr Bates was paid a fee for each report but was not employed by Barclays or retained by it between each examination. Dr Bates conducted the (unchaperoned) medical examinations in a consulting room at his home and is alleged to have sexually assaulted the 126 claimants in this group action during their medical examinations. After Dr Bates died in 2009, the claimants sought damages from Barclays. At first instance, the judge held that Barclays was vicariously liable for any assaults proved to have been perpetrated. The Court of Appeal agreed. Barclays successfully appealed to the Supreme Court.

Reasoning

Lady Hale highlights a number of important points in her reasoning:

• Before one person can be made vicariously liable for the torts of another, two elements must be shown. (i) There must be a relationship between the two persons which makes it proper for the law to make one pay for the fault of the other. (ii) There must be a sufficient connection between that relationship and the wrongdoing of the person who committed the tort. This case concerns the first element. Barclays' case was that since Dr Bates was an independent contractor, it should not be held liable for his wrongdoing. The claimants argued that the law has been broadened by the Supreme Court decisions in Christian Brothers, Cox and Armes v Nottinghamshire County Council[7] ("Armes") and it would therefore be "fair, just and reasonable" to impose vicarious liability in the circumstances of the case [1],[7] and [8].
• However, Lady Hale looked at the decisions of Christian Brothers, Cox, Armes and E v English Province of Our Lady of Charity[8] and emphasised that the question was, as it has always been, whether the tortfeasor was carrying on business on his own account or whether he was in a relationship akin to employment with the defendant. The key, as it was in Christian Brothers, Cox and Armes, will usually lie in understanding the details of the relationship [24] and [27].
• On the facts, Dr Bates was not at any time an employee or anything close to an employee of Barclays. He did do work for Barclays, but the same would be true of many other people who did work for Barclays but were clearly independent contractors, ranging from the company hired to clean its windows to the auditors hired to audit its books [28].
• Lady Hale considered the relationship between the first element of the test for vicarious liability and the definition of "worker" in section 230(3) of the Employment Rights Act 1996. However, she declined to align the common law concept of vicarious liability, developed for one set of reasons, with the statutory concept of "worker", developed for quite a different set of reasons [29].

As Lady Hale says at [29] of the Barclays Bank case, until these recent developments, it was largely assumed that a person would be an employee for all purposes – employment law, tax, social security and vicarious liability. Recent developments have broken that link as employment law now recognises two different types of "worker":  (a) those who work under a contract of employment and (b) those who work under a contract "whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual" (Employment Rights Act 1996, section 230(3)).  However, Lady Hale emphasised that it would be going too far down the road to tidiness for the Supreme Court to align the common law concept of vicarious liability, developed for one set of reasons, with the statutory concept of "worker", which was developed for a quite different set of reasons.

Lady Hale was perhaps referring to potential issues that will arise in another judgment which the Supreme Court will soon hear regarding Uber's appeal as the employment rights of its drivers. Although the case is not about vicarious liability, it will strike at similar issues regarding employment status and may have far-reaching repercussions for workers in the gig economy and the like.

Whilst the decisions in these two cases are alike, and together represent a strong statement of clarification from the Supreme Court, the rationale behind the rulings is evidently different. In Morrisons, the court relied not only on the motivation of the disgruntled employee but also the scope of the work he had been asked to carry out, which was in contrast to the actions he ultimately took. Meanwhile, Barclays Bank concerned whether Dr Bates was truly independent.

As Lady Hale said when passing down judgment in the Barclays Bank case "[n]othing in this judgment seeks to deny or downplay the very serious harm," but "the relationship between Dr Bates and the bank was not such that the bank should be made to pay for it." There is symmetry between this comment and that made by Lord Reed in Morrisons that "the general principle… like many other principles of the law of tort, has to be applied with regard to the circumstances of the case before the court…The words "fairly and properly" are not, therefore, intended as an invitation to judges to decide cases according to their personal sense of justice." With these comments, the Supreme Court make clear that this misinterpreted invitation is well and truly withdrawn.

Ruth Keating gives this short synopsis of the key elements of the decisions.

[1] [2016] UKSC 10

[2] [2012] UKSC 56

[3] WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12 and Barclays Bank plc v Various Claimants [2020] UKSC 13

[4] [2016] UKSC 11

[5] [2013] 2 AC 1, para 35

[6] [2003] 2 AC 366

[7] [2017] UKSC 60

[8] [2012] EWCA Civ 938